October 20, 2017

Five oil projects boost Rosneft presence in Iraqi Kurdistan

Russia rebuilds Iraq’s energy sector in areas freed from ISIS militants

Rosneft says half of the investment could be repaid in oil pumped from the deposits.

As part of the deal, the Russian company will jointly develop five oil blocks in the region, getting an 80 percent stake.

“The new agreements will allow us to talk about the full-fledged entry of the company in one of the most promising regions,” according to the company.

The terms of the deal are similar to those made by the Kurdistan Regional Government (KRG) with other international companies, according to Rosneft.

The company said a ‘conservative’ estimate puts recoverable oil reserves in the five blocks at 670 million barrels.

Last month, Iraqi Kurds voted for independence from Baghdad with the disputed oil-rich Kirkuk province included in the vote despite competing claims to the ethnically mixed region.

Tensions over Kirkuk flared into open conflict as the Iraqi government deployed troops to take control of the area. Baghdad has reportedly seized several critical Kurdish Peshmerga-held positions and oil fields in the region.

Analysts say the tense political situation in Kurdistan could benefit the Russian company.

“Normally internal rate of return from PSA is 15 percent. As Rosneft accepted the risks evoked by the difficult political environment it gets an opportunity to ask for a return of 20 percent,” said analyst at Raiffeisenbank Andrey Polischuk, as quoted by Russian daily Vedomosti.

READ MORE: Rosneft gets access to vast oil transportation system in Iraqi Kurdistan

Moreover, the company may be a top-priority partner for the region when the situation stabilizes, according to the expert.

Article source: https://www.rt.com/business/407174-rosneft-kurdistan-millions-oil-projects/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Russia, Saudis team up to boost fracking tech

Russia Saudi Arabia sign billion dollar deals during King’s visit

The two companies have identified six areas for cooperation, and will have to find the format of cooperation and financing, Dyukov told reporters, as quoted by Reuters.

Earlier this month, Gazprom Neft and Saudi Aramco signed a memorandum of cooperation during the visit of Saudi King Salman bin Abdulaziz Al-Saud to Russia.

Cooperation would include “drilling and well workover technologies, improvements to pumping systems, and the development of large-scale non-metal pipes. The parties also plan to discuss perspectives for collaboration in research and development and experimental engineering works, as well as options for applying innovative solutions to a wide range of technological challenges,” Gazprom Neft said.

“Given the ongoing macroeconomic uncertainties, it is of paramount importance that major oil producers coordinate their activities to improve the stability of the global oil and gas market,” Dyukov noted.  

Apart from Gazprom Neft, Aramco signed deals in Russia with Gazprom on gas cooperation, with the Russian Direct Investment Fund on investment in energy services and manufacturing, with LUKOIL’s trading arm Litasco on collaboration in trading, and with Russian Direct Investment Fund and SIBUR on strategic marketing for petrochemicals.

Read more on Oilprice.com: Big Oil To Bet On Petrochemicals As Demand Peak Looms

In an interview earlier this week, Gazprom Neft’s first deputy CEO Vadim Yakovlev told Reuters that the Russian firm was ‘holding its nose’ to the OPEC/non-OPEC production cut deal because it has made the company cut its production growth targets.

The Russian company sees the production cut deal as a short-term one, Yakovlev said.

Meanwhile, as the OPEC summit at end-November is drawing closer, speculation intensifies as to what the cartel and partners would decide (if at all) to do with the deal that expires in March 2018. Most analysts believe that the pact should be extended until the end of next year for a sustained oil market rebalancing. Just yesterday, the deputy minister for trade and international affairs at Iran’s Oil Ministry, Amir Zamaninia, said that his country would support an extension of the production cut deal until the end of 2018.

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/407162-russia-saudi-arabia-fracking/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Goldman Sachs prefers gold to bitcoin

Bitcoin worse than casino gambling – Russian economy minister

“Precious metals remain a relevant asset class in modern portfolios, despite their lack of yield,” analysts at Goldman Sachs wrote, as quoted by Bloomberg.

“They are neither a historic accident or a relic,” and are still relevant despite new assets like cryptocurrencies, they said.

As uncertainty in markets grows, the price of gold rises, they explained. In the long term, gold will gain because of the continuing demand in emerging markets, particularly in China.

Goldman analysts used several criteria to compare gold and bitcoin, including durability, portability, intrinsic value and unit of account. In three categories gold is better, losing to bitcoin only in portability.

“While both require expertise for correct long-term storage, gold wins because cryptocurrencies are vulnerable to hacking through online wallets or the user’s computer or smartphone, are subject to regulatory risk, and network and infrastructure risk during a crisis,” they said.

“Transferring bullion can be expensive, given its weight, need for a high level of security and high import taxes in some countries, such as India. In contrast, it’s much faster and cheaper to move bitcoins,” Goldman analysts added.

Gold has a limited amount, while it is difficult to control supply in case of cryptocurrencies; gold is better at keeping its purchasing power, and has much lower daily volatility, they said.

This year, bitcoin has rallied about 600 percent, starting the year at less than $1,000 and jumping to near $6,000. Gold prices have risen 12 percent. Bitcoin’s total values is approaching $100 billion, more than the market cap of corporations like Bayer, Goldman Sachs and Nike.

Article source: https://www.rt.com/business/407092-bitcoin-gold-goldman-sachs/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

‘Dr. Doom’ Marc Faber faces media ban for thanking God white people populated America

Dr. Doom warns of stock market selloff ‘avalanche’

“Thank God white people populated America, not the blacks. Otherwise, the US would look like Zimbabwe, which it might look like one day anyway, but at least America enjoyed 200 years in the economic and political sun under a white majority,” the financial analyst wrote in a newsletter in the October edition of his The Gloom, Boom Doom Report.

The comment, branded as racist, has led to a public backlash with major US media outlets rejecting Faber as a guest commentator.

“We do not intend to book him in the future,” said a CNBC spokesperson, as quoted by Reuters.

“Faber has not appeared on the network often, and will not be on in the future,” spokesperson for Fox Business Network said.

In response, the disgraced analyst told Reuters in an email: “What else would you expect? If stating some historical facts makes me a racist, then I suppose that I am a racist. Maybe I am wrong, and the US would be far more prosperous if the blacks had populated it, but then please explain to me why you would think so.”

Faber has reportedly left the board of a global asset manager Sprott. Mining companies NovaGold Resources and Ivanhoe Mines announced the departure of Faber from their boards of directors as well.

“The recent comments by Dr. Faber are deeply disappointing and are completely contradictory with the views of Sprott and its employees. We pride ourselves on being a diverse organization and comments of this sort will not be tolerated,” Sprott Chief Executive Peter Grosskopf said in a statement.

“Ivanhoe Mines disagrees with, and deplores, the personally-held views about race that Marc Faber has published in his current investment newsletter,” Ivanhoe said in a statement.

Article source: https://www.rt.com/business/407086-faber-doom-backlash-race-comments/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Johnson & Johnson wins appeal in $72mn talc cancer risk verdict

Huge talcum powder verdict opens floodgates for lawsuits against Johnson Johnson

The Missouri Court of Appeals for the Eastern District said the case over Alabama resident Jacqueline Fox’s death should not have been tried in St. Louis. The decision is based on a recent US Supreme Court decision which limited where personal injury lawsuits could be filed.

The Supreme Court said state courts could not hear claims by non-residents who were not injured in that particular state and where the defendant company was not based in that state.

A total of $307 million in judgments have been meted out by juries in St. Louis, Missouri, in cases filed by out-of-state residents.

JJ accused the St. Louis courts of being plaintiff-friendly and attempted to get cases brought by out-of-state plaintiffs dismissed.

The 2016 verdict for Fox’s family was the first of four jury awards totaling $307 million in state court in St. Louis to plaintiffs who accused JJ of not adequately warning consumers about the cancer risks of its talc-based products.

US pharma Johnson Johnson loses $110mn talc cancer case

The Missouri appeals court panel cited the Supreme Court’s decision in its ruling over the Fox case, who died four months before trial and who was named as one of 65 plaintiffs in her specific lawsuit, only two of which were Missouri residents.

“The fact that resident plaintiffs sustained similar injuries does not support specific jurisdiction as to non-resident claims,” wrote Judge Lisa Van Amburg.

The plaintiffs’ lawyer said the ruling “represents a denial of justice for the Fox family,” adding they were considering an appeal.

Alabama resident Jacqueline Fox died in 2015 at the age of 62. According to the lawyers, she died after using JJ’s Baby Powder and Shower to Shower for more than 35 years.

The $72 million awarded to Fox’s family by jurors included $10 million in compensatory damages and $62 million in punitive damages.

JJ said it is pleased with the ruling. The company is facing more battles in US courts with nearly 4,800 outstanding talc lawsuits.

Article source: https://www.rt.com/business/407085-johnson-cancer-case-reversal/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Large section of Russian gas pipeline to China completed

Gazprom CNPC agree to start gas supplies via Power of Siberia in 2019

The company plans to build 1,300 km of the 3,000 km long pipeline to deliver Russian gas to China by the end of the year.

“As of today, over 1,095 kilometers of the pipeline are already built, which is 50.7 percent of the total length of its priority section from the Chayandinskoye field to Blagoveshchensk,” said Gazprom.

The Power of Siberia’s first section will run some 2,200 kilometers from the Chayandinskoye field (Yakutia) to Blagoveshchensk (Chinese border). The second phase of the project will include the construction of a section stretching for about 800 kilometers from the Kovyktinskoye field (Irkutsk Region) to the Chayandinskoye field. The third stage provides for expanding gas transmission capacity between the Chayandinskoye field and Blagoveshchensk.

Current work includes drilling gas wells, the construction of a comprehensive gas treatment unit and infrastructure facilities, and follow-up exploration of the oil rim.

The Power of Siberia pipeline is one of the biggest projects involving Russia and China. The deal took more than a decade to negotiate. In July, Gazprom and the China National Petroleum Corporation (CNPC) inked an agreement to start gas deliveries via the eastern route.

In May 2014, the two companies signed a $400 billion 30-year framework to deliver 38 billion cubic meters of Russian gas to China annually.

Moscow and Beijing plan to build another pipeline – Power of Siberia-2 or the western route that will deliver another 30 billion cubic meters of Russian natural gas.

According to the head of Gazprom Aleksey Miller, China’s growing gas consumption was more than 200 billion cubic meters last year and is expected to reach 300 billion cubic meters soon.

Article source: https://www.rt.com/business/407063-gazprom-power-of-siberia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Spain cuts 2018 growth forecast as Catalonia crisis weighs

Spain hopes mass business exodus ends Catalonia’s independence dream

In a letter sent to Brussels, the Spanish government said it was down to the economic cycle as well as “a slight containment of domestic demand, resulting from the negative impact of the uncertainty associated with the current political situation in Catalonia.”

Prime Minister Mariano Rajoy has warned Catalan leader Carles Puigdemont about the economic impact of the crisis.

“The latest steps taken by you and your government are causing a major divide in Catalan society, as well as enormous economic uncertainty that threatens people’s well-being,” Rajoy wrote to Puigdemont on Monday.

The Spanish government gave Catalonia’s leaders until Thursday to pull back the independence bid or face the possibility of direct rule from Madrid.

The eurozone’s fourth-largest economy is undergoing its most serious political crisis since the independence referendum in Catalonia on October 1, where more than two million people voted to break away from Spain.

The uncertainty is harming business confidence in Catalonia. The two biggest Catalan banks were among dozens of companies that have moved their legal headquarters to other parts of Spain.

Catalonia is Spain’s most economically productive region, hosting 7,100 multinationals, including Volkswagen, Nissan, and Cisco. It generates about 20 percent of the country’s GDP and contributes 21 percent of its total taxes.

Losing Catalonia would deprive Spain of about 16 percent of its people, a fifth of its economic output and more than a quarter of its exports.

Analysts say the mass exodus of companies would cause devastating economic consequences for the region, raising fears a prolonged crisis could damage the national economy.

International rating agencies Standard Poor’s and Fitch have said they are considering downgrading the region’s credit score.

Article source: https://www.rt.com/business/406949-spain-economic-forecast-catalonia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Oil prices rising as Iraqi forces advance on Kurdish-held territory

Kurdistan accuses Baghdad of planning oil field seizure

West Texas Intermediate crude rose 1.6 percent to $52.29 per barrel, setting it on track for its highest settlement price since the end of September, according to FactSet data.

Brent crude contracts for December gained 2.13 percent to $58.39, also trading around its highest level since late September.

The oil-producing region has been a contention between the Iraqi central government and the Kurdistan Regional Government (KRG).

The tension in the province has sparked a conflict between Bagdad and the KRG after Iraqi Kurds voted for independence from Iraq in a September referendum. Kirkuk was included in the vote, despite competing claims to the disputed area.

Kurdistan has reportedly shut down 350,000 barrels per day (bpd) of production from the region’s major Bai Hassan and Avana fields as the tension escalated.

According to reports, crude exports continue to flow from fields in Kirkuk despite clashes between government troops and Kurdish forces.

Industry analysts highlight current geopolitical risks may have a significant impact on the global oil market.

“In recent months we have stressed on a number of occasions that the tensions and potential effects on the production and transport infrastructure in the region pose the biggest risk to our fairly conservative price forecasts. We otherwise see the oil market as still amply supplied, which would rather justify a Brent price of $50 per barrel,” analysts at Commerzbank said as quoted by MarketWatch.

“The return of a geopolitical risk premium could usher in a sustained bout of price strength just as OPEC dithers over whether to prolong supply cuts,” said Stephen Brennock, oil analyst at PVM Oil Associates as cited by CNBC.

The oil fields in Kirkuk and deposits in the Kurdish region of northern Iraq were reportedly exporting about 600,000 barrels a day to Turkey via a Kurd-controlled pipeline.

In an attempt to regain control of the disputed area Iraqi troops reportedly captured a refinery, a gas plant and other facilities.

“The Iraqi government is cash-poor, for all the obvious reasons, so consequently gaining control of these northern oil fields, therefore, improves their ability to control a cash generator,” Bob Parker, senior advisor at Credit Suisse told CNBC.

Article source: https://www.rt.com/business/406859-oil-market-rally-iraq-tensions/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Oil price collapse cost OPEC countries over $1tn

China could shatter petrodollar by compelling Saudi Arabia to trade oil in yuan

“Over the past two years, we saw not only a drop in investment in the sector but also a decrease in oil revenues. Collectively, OPEC countries lost more than $1 trillion,” OPEC Secretary General Mohammad Barkindo said Sunday in Kuwait.

According to Barkindo oil demand will grow at a “healthy pace” over the next five years, as renewables are expanding at a high pace.

OPEC predicts oil demand will increase an average 1.2 million barrels a day until 2022 and slow to 300,000 barrels a day in 2035 to 2040.

By 2040, the share of fossil fuels will drop to about 75 percent, OPEC predicts.

On Monday, crude prices were up on news of fighting in the Iraqi oil city of Kirkuk, as the crisis between Baghdad and the Kurdish Regional Government (KRG) escalated.

Brent crude was trading over $1 higher at $58.35 per barrel, while US West Texas Intermediate jumped 88 cents to $52.31.

“The escalation in Northern Iraq is the main driver. Oil supply from this region is at risk,” Commerzbank analyst Carsten Fritsch told the Reuters Global Oil Forum.

READ MORE: Kurdistan accuses Baghdad of planning oil field seizure

Kirkuk accounts for a third of some 600,000 bpd of oil produced in the Kurdish region.

Crude prices were also buoyed by news of renewed US sanctions against Iran.

In December 2016, OPEC, Russia and other major producers agreed to curb production by 1.8 million barrels per day (bpd) for six months from January 1 to support the market and push prices to $60 per barrel. In May, the agreement was extended by another nine months.

Last week, OPEC urged US shale drillers to join production cuts.

Article source: https://www.rt.com/business/406820-opec-oil-prices-collapse-losses/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Kobe Steel scandal could rattle nuclear industry

Kobe’s management admitted that its employees faked quality inspection reports on its steel and other metal products used domestically in automobiles, bullet trains and nuclear power stations. So far, corporate announcements have been vague, offering little clarity about the duration of the quality control lapses or, more important, the type of components involved.

Tokyo Electric Power Co. (9501.T) just announced that it replaced a Kobe-made piece of equipment, offering no other details. Kobe, however, is a major producer of nuclear power plants components. Even if quality control lapses did not extend to those operations, the onus may be on Kobe to prove its innocence.

So what should we expect? If these QA/QC lapses began recently, it should have little or no effect on most of the nuclear assets in the United States. Most of them were built decades ago.

Plants under construction, however, or those recently completed are another matter. In the last period of nuclear new build in the US (basically the 1970s), a relatively muscular Nuclear Regulatory Commission (NRC) took its safety responsibilities seriously, and woe to the builder that thought the rules excessive.

Read more on Oilprice.com: Oil Prices May Hit $60 By End Of 2017

Unfortunately, a raging period of inflation only added to the nuclear builder’s troubles. Toward the end of the decade, the only appropriate choice for some would have been between cigarette or blindfold. Those safety requirements added to plant cost. And in an attitude that today would seem remarkable, that fact didn’t deter the NRC’s administrators.

If a nuclear power plant has to shut down due to concerns regarding the integrity of Kobe’s products, it’s needless to say it could get expensive. A typical 1,000 MW nuclear facility operating at full capacity can generate annual revenues of between $500 million and $1 billion.

Unlike a coal or natural gas fired power plant, shutting a nuclear plant down does little to reduce costs. Most nuclear costs are fixed, that is, they are spent before the thing is even turned on. Therefore, the plant’s owner will likely try to foist extraordinary expenses like these onto consumers (this is not possible in competitive markets). Or, power plant owners can stand on their rights and demand compensation from Kobe. While perhaps fruitful, it’s doubtful this process would be brief.

Thus, investors in nuclear power have reason for some near-term heightened sense of concern. Questions will be asked as to the provenance of equipment and components. Certain corporations especially under duress might adopt “truth on the installment plan” policies. All the negative news is eventually disclosed—but only after PR efforts downplay the likelihood of meaningful corporate impact.

What’s an investor to do? At this stage, with so little information available, we can’t judge whether Kobe’s latest news will make any financial difference to the nuclear industry.

Read more on Oilprice.com: The Next Big Digital Disruption In Energy

But it underlines the need for trust and compliance throughout the manufacturing and operating process within the industry. And perhaps more standardization.

This is the second major QA/QC scandal involving a steel supplier of nuclear reactor components. Le Creusot Forge, now part of France’s Areva, was similarly accused of fabricating data for nuclear plant components.

We’re reminded here of the great bridge builder Roebling. When informed that his suppliers had short-changed him, he reportedly responded that he assumed they would—and designed accordingly.

Do today’s nuclear plant builders have the same dim view of human nature as Roebling? If not, the Kobe story should be regarded as serious until you hear otherwise. 

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/406703-kobe-steel-scandal-nuclear-industry/?utm_source=rss&utm_medium=rss&utm_campaign=RSS